Spreadtrum to invest $10 million in Micromax, to expand in emerging telecom markets

Telecom Lead India: Spreadtrum, a fabless semiconductor
provider in China, will invest $10 million in Indian handset company

Following the investment, Spreadtrum will become the
preferred chip maker for Micromax. Both the companies will target emerging
telecom markets for future growth.

The investment is significant as Micromax Informatics has
recently withdrawn its Rs 426 crore initial public offering due to volatile
market conditions in India.

Due to delay in IPO, Micromax could not complete several
future projects. At the time of submitting the draft prospectus for IPO,
Micromax said that the company would use about 50 percent of the IPO proceeds
for setting up a handset manufacturing plant, preferably in Sriperumbudur in
Tamil Nadu, while about Rs 125 crore would be used for marketing and
advertising for its brand over the next two years. Another Rs 75 crore would go
towards investment in acquisitions and other strategic initiatives.

Micromax, which ships more than 4 million handsets
quarterly, has established presence in India, Hong
Kong, Bangladesh, Nepal,Sri-Lanka, Maldives, UAE, Kingdom
of Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil.

Micromax currently ships more than 60 models ranging from
dual-SIM feature phones to 3G Android smartphones.

Spreadtrum will collaborate with Micromax on the development
of new innovative products in order to gain major market share.

“We focus on delivering innovation to the consumer at
affordable prices, and our partnership and collaboration with Spreadtrum
supports our objectives of feature customization to local needs, rapid time to
market, and innovation on value for money platforms,” said Rajesh
Agarwal, managing director of Micromax Informatics.

“Micromax’s focus on unique, innovative features has
allowed it to rapidly establish a leading position in the Indian and global
handset market. Our mutual cooperation with Micromax will help us expand our
reach in emerging markets and ensure that our R&D investments are closely
aligned with the world’s leading brands,” said Leo Li, president and
CEO of Spreadtrum.

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